Tag Archives: Charlie Ergen

Update on Dish Cellular

I recently checked on the status of Dish, which is trying to become the fourth major cellular company in the country. Dish entered the cellular business in 2020 as a consequence of the merger of Sprint and T-Mobile. Sprint already owned a lot of spectrum including 600 MHz and 700 MHz spectrum that covers most of the country, along with 1,700 MHz AWS spectrum that is the workhorse in cellular networks. Dish was also able to buy Sprint’s 800 MHz spectrum.

Dish was already under pressure at the time from the FCC to use its spectrum portfolio, and the FCC gave Dish until June 2023 to cover 70% of the U.S. population with cellular facilities. Dish got a jump on the business side of things by buying Boost Mobile for $1.1 billion.

Dish took a big chance on network construction and pursued an open RAN architecture, which has the goal of using off-the-shelf generic hardware instead of the proprietary gear offered by the handful of industry vendors. Dish ended up building a network that was a mix of open RAN and more traditional gear, but its attempt to use open RAN slowed network construction. However, Dish was able to meet its commitment to the FCC after having spent over $6 billion on the network. The company is expected to spend about $1 billion in 2024 and spend an additional $1 billion in the first half of 2025 to meet the next FCC commitment.

Dish struggled, and only has about 7.5 million customers left from its acquisition of 9 million Boost Mobile customers in 2020. The company has had little luck adding customers to the new network. Dish became authorized to sell the iPhone in late summer 2023, and hopes that will help sales.

A lot of analysts are pessimistic about Dish’s future, and some of them expect the company to eventually go bankrupt. However, Dish has the resources to make it until the end of 2026. Its chances were increased by a recent merger with Echostar, where Dish now has a minority position. Echostar had $2 billion in cash reserves that will buy time for Dish.

Some analysts think that Dish’s spectrum is worth more than its debts, and liquidation could result in net positive equity for Dish owners. However, the likely buyers are the three big cellular carriers, and there are challenges for each of them to buy more spectrum today. In fact, they are all sitting on excess spectrum, which is part of the reason they are all pursuing FWA wireless.

Dish is now at the point where the company needs to acquire customers. This is going to be a challenge in a market when the other three cellular carriers are all in full marketing mode. The big cellular companies are marketing heavily to stave off the large cable companies that have entered the cellular market.

Becoming a Dish customer is an interesting option for customers. There are a lot of advantages of being on a large empty network, something experienced by many in the first year when the other carriers opened their new 5G networks.

It would seem like a logical opportunity for Dish to pursue FWA home broadband like is being done by the other carriers. However, Dish has not constructed the extra antennas needed at its cell sites needed to support the home broadband product. Dish is interested in pursuing FWA using 12 GHz spectrum, and the FCC is investigating that use of the spectrum. Last summer, Dish considered buying some of the assets of UScellular, which are largely underutilized and deployed in rural areas where there is not a lot of other competition.

It’s going to be interesting to watch Dish for the next few years. Charlie Ergen has been often quoted as saying that he’s spent much of his career managing companies with his back to the wall, and he’s still optimistic that Dish can reach profitability. I think it’s still a little early to bet against him.

A New Cellular Carrier?

One of the most interesting aspects of the proposed merger of Sprint and T-Mobile is that the agreement now includes selling some of Sprint’s spectrum to Dish Networks to enable them to become a 5G cellular provider. This arrangement is part of the compromise required by the Department of Justice to preserve industry competition when the major wireless carriers shrink from four to three.

This agreement would have Dish Networks paying $5 billion for the spectrum assets, which complement the spectrum already owned by Dish. The agreement also includes an MVNO agreement between Dish Networks and T-Mobile that would let Dish enter the cellular market immediately before having to build any network. As part of that arrangement, Dish would purchase Boost Mobile from T-Mobile for $1.4 billion, providing them with an immediate base of cellular customers.

Dish already owns spectrum valued at several billion dollars. The company has been under pressure from the FCC to deploy that spectrum, and Dish recently began building a nationwide narrowband network to support IoT sensors. The company admits they are not happy with the IoT sensor business plan but didn’t want to lose their spectrum. Perhaps the best aspect of this deal from Dish’s perspective is that they are being given a new time clock to use existing spectrum in a more profitable way.

This deal has plenty of critics who don’t believe that Dish can turn into a viable competitor. This includes numerous consumer groups as well as a group of state Attorney Generals who have filed to block the merger. The merger is far from a done deal and is going to court, although it has crossed the major hurdles of getting DOJ approval and informal approval from the FCC.

Dish Chairman Charlie Ergen says the company is ready to become the fourth facility-based cellular carrier in the market. He thinks that launching with a new 5G network will provide some advantages over carriers that will be upgrading older networks. The company faces some significant challenges such as gaining access to tower space in crowded markets. The other cellular carriers have also been busy and have invested significant amounts of capital in building fiber to support cellular small cell sites.

The challenge of building a new nationwide cellular network from scratch is intimidating. As a satellite provider, the company does not already operate an extensive landline network. The logistics of hiring the needed talent and constructing the core network infrastructure is a major challenge. A few years ago Dish had estimated the cost to build a nationwide cellular network at $10 billion. The company says they have already released an RFI and an RFP to start the process of hiring contractors to build the new network.

Ergen says the company could build the core network in 2020 and could construct a network to cover 70% of the homes in the country by 2023. As far as being competitive, Dish says they would enter the market with ‘disruptive’ pricing to capture market share.

Dish needs something like this if it is to survive. The company lost over 1.1 million satellite TV customers last year, a little over 10% of its customer base. It looks like cord cutting is accelerating this year and one has to wonder how long they will remain as a viable business.

Interestingly, Dish won’t be the only new competitor in the cellular market. Comcast recently spent over $1.7 billion on spectrum. The company has been reselling cellular service and offering low-price broadband as part of its bundle for the last few years. The company reporting hitting 1.2 million cellular customers at the beginning of this year. While Comcast is not likely to tackle building a nationwide network, they could become a formidable competitor in the urban markets where they are already the cable provider. Other cellular companies like Charter and Altice are considering a similar path.

Two Views on Skinny Bundles

The industry is abuzz this year with talk about skinny bundles. But there is a lot of disagreement about whether skinny bundles are really going to be effective and if they will put a serious dent in the pay-TV market. Today I look at opposing views from two major players in the industry.

First are the recent statements by David Zaslav, the CEO of Discovery Communications. He says the skinny bundles we see in the US are not really ‘skinny’ and are instead just another way to package traditional programming. He says that Discovery sells programming around the world and that in almost 200 other worldwide cable markets there are true skinny bundles that cost between $8 and $12 per month. He says these bundles are popular and give people a real alternative to the big cable bundles.

By contrast all of the major bundles on the market today in the US are priced at $30 to $60 and just provide a different alternative to the cable companies. The current US bundles are expensive because they include high-cost programming like sports, movie channels and major cable networks.

Zaslav’s statements are somewhat ironic since his company is one of the major programmers that drives up the size and the cost of traditional cable TV big channel line-ups. Discovery today includes a suite of 13 channels such as the Discovery Channel, TLC, Animal Planet, Science, and a host of other Discovery channels. Many of my clients are required to carry all of these channels if they want to carry any of them, and at least eight of these channels are required to be in the lower expanded basic tier where most customers have to pay for them. It’s also interesting that most of the current on-line skinny bundles in the US are not carrying the Discovery networks.

An interesting contrast to this comes from Charlie Ergen, Chairman and CEO of Dish Networks. He is wildly enthusiastic about the current US skinny bundles, including his own Sling TV. He says the company first launched Sling TV to try to lure cord cutters back to a paid subscription. But the company found out that they were instead taking customers away from pay-TV including his own satellite customers from Dish networks.

He believes that the public perceives the current US skinny bundles as a real alternative to the traditional pay-TV bundle. Sling TV has done better in the market than original projections. At the end of the 1st quarter of 2017 the company had 1.3 million customers, about double where they sat just last June. The other similar subscription services from Hulu and YouTube are also doing quite well and together are carving off a noticeable slice of the traditional TV market.

But Ergen admits that his Sling TV is a replacement for traditional TV, not a wildly different alternative. A lot of customers like on-line services because they offer the the ability to start and stop service at will or to add or subtract additional small packages of channels to the line-up as their interests change. It’s certainly possible that much of the success of these new bundles comes from consumers who are fed up with the big cable companies.

It’s also debatable if people who move from traditional cable to Sling TV or similar services can be classified as cord cutters. They are cord cutters in that they got rid of coaxial cable feed from the cable company, but they are still subscribing to a lot of the same channels as before and which are still broadcast at set times on a line-up.

For now it looks like the current skinny bundles are meeting moderate success and are attracting a few million customers. They haven’t been around very long and I suspect that a lot of consumers have either never heard of them or haven’t given them any serious consideration. But you can save money with these packages while gaining the flexibility to connect and disconnect on-line at any time – avoiding those dreadful call to cable customer service.

I know I would love to see the skinny bundles that David Zaslav describes. I imagine that each $8 – $12 bundle contains a limited number of channels. At a small size these are probably as close as anybody can get to a la carte programming. And at the end of the day that’s what a lot of cord cutters really want.